Buy-to-let investors who have not paid tax on money made from letting or selling a property are to be targeted in a major crackdown that accountants say will net millions of pounds for HM Revenue & Customs.

Hundreds of letters were sent to landlords this week in the first stage of what the Revenue is calling its Property Campaign.

Offenders will be forced to repay taxes dating back six years and could face additional fines and penalties equal to 100% of the total tax owed.

It is understood officials have cross-referenced data from hundreds of letting agencies against stamp duty returns to compile a database of landlords who may not have paid any or enough tax.

Two groups of landlords have been identified: existing taxpayers with information showing they have let a property but have not disclosed any income; and individuals with no tax record but where the taxman is aware they have let a property.

The letters demand details on any property investment activity going back six years and request a detailed breakdown of costs such as repairs and professional fees.

The taxman said the first round of letters was likely to be followed by thousands more.

If landlords fail to reply, the Revenue said in extreme cases it would begin criminal investigations.

Landlords who reply promptly and fully disclose their incomes are less likely to face fines, a spokesman added.

Change in tactics

Peter Goodman, senior tax partner of accountants Wilkins Kennedy, said: "There has often been speculation that Revenue & Customs would start a compliance drive against landlords, but up until now enquiries have been pretty piecemeal. This is a real change in tactics.

"Individuals who receive these letters need to take them seriously. If they do owe tax, they should consider early disclosure as part of a negotiated settlement."

Goodman said the letters could result in a "bonanza" for the Revenue.

John Cassidy, tax investigations partner at accountancy firm PKF, said while there was no legal requirement on a landlord to respond to the letter, ignoring it "may be counter productive".

He added: "Those who did not receive a letter this week and believe they may have escaped the Revenue's grasp should note that this is only a pilot exercise for ongoing interventions that will start later this year."

There are understood to be nearly 1 million buy-to-let landlords in the UK, with the numbers ballooning in recent years.

It is estimated that 340,000 loans and remortgages were granted to buy-to-let landlords in 2007 - more than the total amount of loans to first-time buyers. Many landlords have portfolios of 50 or more homes.

As the numbers have soared the Revenue has become concerned that many may have fallen under the tax radar.